Podcast: How arbitration and ADR can be used together

In this short podcast Professional Support Consultants Hannah Ambrose and Vanessa Naish look at how Arbitration and Alternative Dispute Resolution (ADR) can work together. The podcast considers how parties can agree to an ADR process in addition to or alongside arbitration (looking at approaches in different jurisdictions and under different arbitral institutional rules), before turning to the complexities of drafting escalation clauses in contracts. Finally it looks at how a successful settlement should be formalised to be most effective and enforceable.

For more on this topic, see our guide ‘Use of mediation in arbitration‘, from our popular series of ADR Practical Guides.  (The full set of ADR Practical Guides can be accessed here – including a business-friendly introduction to mediation and guides to preparing for a mediation).

For further information, please contact Hannah Ambrose, Vanessa Naish or your usual Herbert Smith Freehills contact.

Hannah Ambrose
Hannah Ambrose
Professional Support Consultant
+44 20 7466 7585
Vanessa Naish
Vanessa Naish
Professional Support Consultant
+44 20 7466 2112

ADR Practical Guide No. 6: Use of Mediation with Arbitration

We are pleased to launch the sixth guide in our series of ADR Practical Guides, designed to provide clients with essential practical guidance on various processes falling under the banner of alternative dispute resolution (ADR), with a particular focus on mediation.

Guide No. 6: ‘Use of Mediation with Arbitration’ provides a brief description of how mediation and other ADR processes can be used with arbitration, including some key points to consider at the stage of drafting dispute resolution clauses and during the arbitration process.

Previous guides in the series can be found on our ADR webpage, together with other materials including our award-winning research into how corporates use ADR.  The other guides include:


UK: High Court finds that agreement to engage in time-limited ‘friendly discussions’ is enforceable

The Commercial Court has held that a dispute resolution clause requiring the parties to seek to resolve a dispute by ‘friendly discussions’ constituted an enforceable condition precedent to arbitration: Emirates Trading Agency LLC v Prime Mineral Exports Private Limited [2014] EWHC 2104 (Comm).

Although decided in the context of an arbitration clause, it appears from the judgment that the same conclusion would have been reached if the agreement had required such discussions before issuing court proceedings.  If this approach is followed in other cases, it will represent a stark change in the English courts’ position on agreements to negotiate in dispute resolution clauses  –  which has historically been that a bare agreement to negotiate is too nebulous and does not define the parties’ rights and obligations with sufficient certainty to enable it to be enforced.

The decision is also of interest for the Court’s conclusion that the obligation to seek to resolve disputes by friendly discussions ‘must import an obligation to seek to do so in good faith’, referring to the 2013 Yam Seng decision in which the High Court controversially implied a duty of good faith into a distribution agreement (see our post here ).

However, it is important to note that the clause being considered in this case obliged the parties to engage only in informal discussions – as distinct from a more structured ADR process, such as mediation or conciliation.   The decision’s relevance to the latter type of clause is worth considering, particularly as the conclusion appears at first blush to be at odds with the established line of authority regarding the enforceability of such structured ADR clauses. Continue reading

UK: TCC decision underlines the importance of dispute resolution provisions being clearly incorporated in contractual documentation

The Technology and Construction Court has recently granted an injunction restraining an adjudication from proceeding, on the basis of a finding that the contractual provision relied upon to appoint the adjudicator did not in fact form part of the contract that governed the parties’ dealings.  As an adjudicator’s jurisdiction is rooted in the parties’ agreement, the lack of a valid contractual basis meant that the appointment had been a nullity: Twintec Ltd v Volkerfitzpatrick Ltd [2014] EWHC 10 (TCC).

The decision highlights the importance of parties ensuring that any dispute resolution mechanism they intend to apply to their dealings is clearly incorporated in their contractual documentation – including in interim documentation intended to be superseded by a more formal contract.

Michael Mendelblat and Rory Wilson consider the case. Continue reading

UK High Court claim struck out as full redress was available under an ADR scheme

The UK High Court recently refused to allow a claim to proceed in relation to mis-selling of an insurance product on the basis that the claimants had already been offered full redress under a formal ADR scheme established in relation to such complaints.   The decision is a further example of the UK courts’ support for ADR and illustrates that the courts’ artillery in this regard is not limited to imposing costs sanctions at the conclusion of litigation (Christopher and Claire Binns v Firstplus Financial Group Plc [2013] EWHC 2436 (QB)). Continue reading

UK High Court finds conciliation clause too uncertain to be enforceable

As discussed in relation to the Sulamerica case (see post), it is relatively common to have a tiered dispute resolution clause providing for conciliation or mediation before arbitration.  As the Sulamerica case demonstrated, a relatively significant degree of specificity is required (either through bespoke drafting or by importing the standard terms of an ADR institution) before such a clause will be rendered enforceable and not a mere agreement to negotiate under English law.

In Wah (aka Tang) v Grant Thornton International (GTIL) Ltd [2012] EWHC 3198 (Ch), the High Court provided helpful guidance as to the drafting requirements of a conciliation clause which was purported to be a precursor to arbitration in Grant Thornton’s Network Membership Agreement.

Continue reading

The rise of ADR in Japan

A number of alternative dispute resolution procedures are available and recognised in Japan – including expert determination, mediation, conciliation, and multi-track dispute resolution processes (ie a combination of different dispute resolution mechanisms such as arbitration and expert determination). Peter Godwin, Managing Partner of Herbert Smith Freehills GJBJ, Tokyo, reviews the increase in ADR usage in certain sectors, as well as the rise of dispute escalation provisions and agreements to negotiate in good faith. Continue reading

Arbitration or ADR?

In Turville Heath Inc v Chartis Insurance Uk Ltd [2012] EWHC 3019 TCC, The UK High Court held that a clause providing for loss to be assessed under an insurance policy by way of a so-called “arbitration” procedure was non-compliant with the Arbitration Act 1996 and therefore not a genuine arbitration clause. The court found, however, an alternative way to allow the procedure, which was more akin to ADR, to avoid wasting the substantial sums which the parties had already spent on the process. Michael Mendelblat examines the court’s decision and its implications. Continue reading

ICC to revise ADR, Expert Determination and Dispute Board Rules

Earlier this year, the ICC Commission on Arbitration set up a Consultative Task Force comprising experts in the field of international ADR to review and revise their ADR Rules, Rules for Expertise and Dispute Board Rules. These ICC rules are available for parties to adopt, either in their commercial contracts or at the point of dispute, to resolve their dispute through ADR (for information click here), expert determination (for information click here), or a dispute board (for information click here).  To view the ICC’s current rules, click here.

The guiding principle for the Task Force is that changes or additions to the above rules should only be made when it is genuinely useful or genuinely necessary to do so. The Task Force is currently amending the various rules, and meetings are taking place to discuss their drafts. It is the ICC’s expectation that the revised ADR rules will be submitted to the ICC Commission members at a meeting in November 2012, and approved in the spring of 2013.

Herbert Smith Freehills are on the Consultative Task Force and have advised the ICC on the revision of their ADR Rules.

International Bar Association launches investor-state mediation rules

Earlier this month, the IBA unanimously approved and adopted rules drafted by a subcommittee of the IBA’s mediation group. The rules are designed for the mediation of investment–related differences or disputes involving states and state entities, whether or not they arise out of a contract between the parties. Mediation under the rules may take place at any time, regardless of whether court, arbitration or other dispute resolution proceedings have been initiated. It is hoped that the rules will bridge the gap at the domestic legal level, where mediation of investor-state disputes is not often promoted. Continue reading